GENC3004 Personal Finance
Mar 13,23Question:
The Financial Plan Assignment is all about you, your aspirations and your plan for achieving your life objectives. It involves developing a comprehensive financial plan for the rest of your life. It is one of the most useful assignments that you will undertake at university. Each section of your financial plan provides you with the opportunity to reflect deeply on the theory covered in the course and to make practical, specific and detailed application of that theory to your expected future life stages. You should work on your financial plan gradually during the term as you cover each Unit.
This is an individual assignment. Either copying the work of another student or basing your financial plan from another student’s work is academic misconduct and will result in a fail grade being awarded for this course.
Objective
The objective of this assignment is to help you to develop a detailed financial plan that will act as a roadmap for the rest of your life. It also provides you with an opportunity to reflect on the theory covered in each Unit and to think about how to practically apply that theory to your current and expected future situation.
Answer:
Introduction
Personal Financial Planning
Student name:
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Table of Contents
Introduction. 3
Financial development plan. 3
Importance of financial plan. 5
Concept of theory. 6
Application of the plan in present and future situations. 6
Conclusion. 6
Reference list 8
Introduction
A financial plan is known as the comprehensive picture of the current financial expenditures. Maintaining a financial plan is very important for every individual. It helps in understanding the flow in and the flow out of finances in a person’s life. A financial plan consists of a set of goals and objectives that needs to be attained and fulfilled by an individual. Constructing a financial plan is very important as it will help a person to systematically manage his finances throughout his entire life. In this following report, a personal financial plan has been developed and its implication in current and future situations has also been illustrated.
Financial development plan
| Goals | Ways to achieve the goals | Obstacles | Improvement ideas | Time-bound |
| Saving 50% of pocket money | The pocket money that is received, 50% of it should be saved so that it can be utilised later. For this, a piggy bank can be used to save money (Rai, Dua&Yadav, 2019). | The main obstacle that will come along the way is getting self-manipulated in buying stuff that is of no use such as toys, food and beverage items, shopping and many more. | Follow the aim of saving a particular amount of money at the end of each day. | This goal should be achieved at the end of each month. |
| Investing the money | The saved money should be invested for something productive like investing the money in effective online courses. To do this a bank account has to be opened and the saved money should be invested in that account at the end of every month. | The saved money can easily get spent in various sources if it is not invested or deposited in a bank account. If the saved money is kept too long in a piggy bank then there are chances that it will get spent. | The primary thing that has to be done is to open a bank account and a remained must be set that will notify the date when the amount has to be deposited in the bank account | This goal should also be achieved every month. |
| Saving money for career plan | The money that is deposited in the bank account every month should be saved for investing in courses that will help in improving skills and abilities for career development. | The saved money can easily get spent on activities or vacations that will not be of any use in career development (Waliszewski&Warchlewska, 2020). | Dedication is the only way through which this goal can be achieved. There must be dedication and determination in saving money so that the chosen career path can be achieved. | This goal will be achieved after saving a considerable amount of money that is required to move forward with the chosen career path. |
| Saving money for future | After investing the money in the career path, the money that is saved should be invested for future goals and objectives. The process of saving money each month should be continued so that enough money can be saved for the future. | The most potential obstacle that will come along the way is that after accomplishing the career goal, the will for saving more money might slow down. | The process should be continued without any failure and the aim of a brighter future that is financially stable should always be kept in mind | This goal will be accomplished in the next 2-to 5 years. |
Importance of financial plan
Figure 1: Components of personal financial planning
Source: (Canarahsbclife, 2022)
There is plenty of importance and benefits of a financial plan. Some of them are:
Increase savings: Maintaining a financial plan helps a person in saving more money at the end of each money. This will help a person in investing that money in important activities or things.
Peace of mind: A person who is able to maintain and follow a financial plan will be able to gain peace of mind as he will have enough money to fulfill all his dreams and desires.
Prepared for emergencies: A lot of money gets invested in medical treatments (Urban et al., 2020). Especially if someone meets with a medical emergency then a lot of money is required for the treatment purpose.
Concept of theory
The theory of personal financial planning is mainly based on the foundations of Becker, Markowitz and Modigliani. This is one such theory that will effectively help a person in constructing a financial plan through which the various financial expenditures can be supervised and managed. The createors of this financial planning theory have stated that this theory will be helpful for both individuals and also for business organisations (Topa, Lunceford & Boyatzis, 2018). This theory has identified the important financial goals and objectives that need to be achieved in order to maintain financial stability in present and future life.
Application of the plan in present and future situations
The application of the financial plan in both present and future life is done below:
Present life: In the present life, there are a lot of short-term goals that need to be achieved and maintaining a financial plan will help a person effectively achieve all those goals. There are things in which humans spend their money and hence the spending must be systematically monitored.
Future life: In the future, there are many long-term financial goals that one needs to accomplish and for that maintaining a financial plan and following it religiously is very important (Olafsson & Pagel, 2018). Future goals such as buying a house, going on a vacation, learning a new course and many more required money and for this one must maintain a financial plan so that enough money can be saved that will help in achieving and living all these future endeavours
Conclusion
It can thus be concluded that maintaining and following a financial plan is very important for every individual. Financial plans assist a person in saving money so that the money can be invested in something productive. A financial plan also helps a person in meeting all the financial goals and objectives of present and future life. The plan that has been constructed in this report will be very helpful in maintaining financial stability in present and future life. With the help of an effective financial plan, one will be able to systematically manage all the financial expenditures.
References
Canarahsbclife. (2022). What are the components of a financial plan?.Retrieved 4 February 2022, from https://www.canarahsbclife.com/blog/life-insurance/what-are-the-components-of-a-financial-plan.html
Olafsson, A., &Pagel, M. (2018). The liquid hand-to-mouth: Evidence from personal finance management software. The Review of Financial Studies, 31(11), 4398-4446. Retrieved from: https://files.consumerfinance.gov/f/documents/058_Pagel_TheLiquidHand-to-Mouth….pdf
Rai, K., Dua, S., &Yadav, M. (2019). Association of financial attitude, financial behaviour and financial knowledge towards financial literacy: A structural equation modeling approach. FIIB Business Review, 8(1), 51-60. DOI: 10.1177/2319714519826651
Topa, G., Lunceford, G., &Boyatzis, R. E. (2018). Financial planning for retirement: a psychosocial perspective. Frontiers in psychology, 8, 2338. DOI: https://doi.org/10.3389/fpsyg.2017.02338
Urban, C., Schmeiser, M., Collins, J. M., & Brown, A. (2020). The effects of high school personal financial education policies on financial behavior. Economics of Education Review, 78, 101786. Retrieved from: https://www.researchgate.net/profile/Carly-Urban-2/publication/323842069_The_Effects_of_High_School_Personal_Financial_Education_Policies_on_Financial_Behavior/links/5e8739e992851c2f5278ac23/The-Effects-of-High-School-Personal-Financial-Education-Policies-on-Financial-Behavior.pdf
Waliszewski, K., &Warchlewska, A. (2020). Attitudes towards artificial intelligence in the area of personal financial planning: a case study of selected countries. Entrepreneurship and Sustainability Issues, 8(2), 399. DOI: http://doi.org/10.9770/jesi.2020.8.2(24)
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